S&P Downgrades Europe’s Bailout Fund

    Activists of the Occupy Frankfurt movement have set up a fire place near the Euro sculpture in front of the European Central Bank in Frankfurt, Germany, Thursday, Nov.3, 2011. The ECB announced to lower their key interest rate to 1.25 percent. (AP Photo/Michael Probst)

    Michael Probst / AP Photo

    Standard & Poor’s has slashed its long-term AAA+ credit rating on Europe’s rescue fund following downgrades on nine euro-zone countries on Friday. S&P released a statement saying the latest downgrade was all but inevitable following identical cuts to the sterling credit ratings of France and Austria, two major guarantors of the bailout fund, known as the European Financial Stability Facility. Though the EFSF said the downgrade won’t reduce its $558 billion lending capacity, the European Stability Mechanism will replace it as a rescue fund. Meanwhile, Greece has been warned about a potential default if it doesn’t secure an agreement over bond holdings with private creditors, after talks broke down with the creditors on Friday.

    Read it at Reuters